New ACA Rules After Humana Leaves Marketplaces

On Wednesday, the Trump Administration proposed changes to the ACA individual market in order to “stabilize the individual and small group markets.” This comes hours after Humana announced they would drop out of the insurance marketplaces in 2018, and Aetna and Anthem may not also. Furthermore, Aetna CEO Mark Bertolini stated the exchanges have entered a “death spiral,” where high premiums force out the healthiest from the marketplace, in turn – in order to cover the costs of an older and less healthy base of people – the insurance companies increase premiums. And the cycle continues.

“Humana’s exit is the latest in a series of developments that calls into question the long-term viability of the ACA Marketplaces, said Benjamin Conley, Partner, Seyfarth Shaw. Fewer insurers equals less competition, equals higher premiums. To the extent politicians in D.C. are interested in preventing a mass exodus from the remaining insurers, they need to take quick, decisive steps to address the uncertainty regarding the future of the ACA. Humana’s exit should have limited impact on large employers, but small employers who sought coverage through the small business Marketplaces may find fewer options available going forward.”

The Trump Administration’s changes focus on tightening the enrollment process to make it harder for individuals to move in and out of healthcare coverage, which insurers claim has added to the “death spiral.” The changes include allowing insurers to collect unpaid premiums when an enrollee signs up with an insurance company they own money to again, lowering the guaranteed coverage offered by some silver level plans, give states oversight of doctor and hospital networks, shortening the open enrollment period to November 1 through December 15 to match that of employer-sponsored plans, and placing stronger emphasis on verifying that anyone who enrolls outside of an open enrollment period is eligible for a “special enrollment period.”

Insurers and Republican legislators think these changes are a good start.

“If we don’t take more steps like that, having an Obamacare subsidy will be like having a bus ticket in a town where no buses run because there will be zero choices to buy,” Senate health committee chairman Senator Lamar Alexander said to reporters.

However, there are many critics of the proposal as well. Removing some of the guaranteed issues of silver plans will cut premiums but at the cost of increased out-of-pocket costs. Moreover, making it harder for people to enroll, coupled with the weakening of the individual mandate – which was intended to keep healthy people in the marketplace – could cause premiums to increase further. By making it more difficult for healthy people to enter the market, they will not be able to contribute their premiums, so we would be right back where we started.

What the overall impact will remain to be seen, as will which of these changes – if any – will make it to the final replacement bill. As the administration begins their changes to the ACA, the best way to ensure that you and your plan are compliant is to be prepared.

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